Observing that India is 'basking in the glow' of domestic business confidence, the International Monetary Fund on Wednesday said the country has been growing strongly but needs further reform to maintain or even accelerate the growth.
"India has been growing strongly and is basking in the glow of domestic business confidence and growing international interest," Raghuram Rajan, IMF economic counsellor, told a press conference in Washington.
But to "maintain or even accelerate growth India will need further reform," he noted.
Unfortunately, Rajan said, the government has not built the needed consensus and even the halting step toward fiscal consolidation or giving way to populist measures. "There is tide, as Shakespeare wrote, which taken at the flood leads on to fortune. India cannot afford to miss the tide again."
Replying to a question, Rajan said that Indian economy is to be complimented for reaching the rate of growth it has achieved. But there are clear situations where reforms are needed and government is fully cognizant of it.
"The concern here is these reforms are not happening despite the best wishes of the government and that is why we are talking about political consensus," Rajan said.
The areas where reform is needed are well-known, he said, adding fiscal deficit is something the finance minister has repeatedly pointed out.
There are also other areas, for example pension reform and the energy sector where power is soon going to be a constraint, Rajan said.
"We are raising these issues when India is doing so well because the concern is about future. If these reforms are not implemented now, it will constrain growth, which is needed even higher than it is right now. That is why we raised these issues not in anyway to detract from what has already been done."
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